Special Reports

PTC’s innovative outlook, robust solution toolbox, and legacy in CAD and PLM make it a valuable IoT partner

Strategic findings

Shift in focus to AR/VR

In our 2018 LiveWorx EP we suggested a
shift from an emphasis on PTC’s ThingWorx IoT platform to PTC being more vocal
about Vuforia, its AR/VR solution, and its wider product portfolio. TBR
believes that shift has continued with much of the messaging centered on the
business implications of augmented reality as well as how its entire product
base works in symphony, and less focus on ThingWorx as its tip of the spear
into digital transformation.

This shift makes
sense. The IoT platform space is saturated with established vendors, along with
several smaller entrants, offering some shape of IoT platform. PTC has the key
components for an IoT platform, but so do others, including the giants Amazon
Web Services (AWS), Microsoft, IBM, Oracle and Google, and OT stalwarts such as
Bosch and Siemens. It is hard for PTC to stand out by messaging its IoT
platform alone, despite a robust offering, as the IoT platform market is busy. TBR
believes the shift could also indicate IoT is not growing quite as fast as PTC hoped.

Instead, PTC has increased
its messaging around AR/VR. TBR believes PTC is positioning AR as a new differentiated
niche to bring customers into its wider ecosystem, positioning it as a “wow”
factor and distinct from peers’ offerings, as well as enhancing the value of other
products such as Creo, Windchill, and ThingWorx. Based on the compelling
presentations, messaging, and customer lineup using Vuforia, TBR believes PTC
has a competitive AR/VR product.

PTC’s pitch is that AR helps
customers add the human element to an IoT solution — instead of getting insight
from dashboards in the board room, insight is delivered in real time on the
factory floor. Conversely, in PTC’s view, AR/VR helps feed data into the IoT
solution. Information around what workers see, such
as a fire, a faulty part, parts that need to be replaced as well as unsafe
conditions, can be fed into a centralized IoT platform, much like a sensor
inside a machine. Ultimately, PTC seeks to “decorate” the
industrial world with real-time information, and extend the value of IoT data
through AR. It remains to be seen how well AR contributes to feeding data into
an IoT solution. TBR believes AR is not there yet, but believes PTC did a good
job of showing how AR can provide an actionable UI and lead an IoT solution to
be more operationally effective.

Key outcomes PTC messages
around AR/VR include reducing complexity by allowing workers to always have
information on parts and machines; ensuring quality control and compliance using
step-by-step checklists; and improving efficiency through gamification. It also
offers a drastic reduction in training time as the Vuforia Expert Capture
(formerly Vuforia Waypoint) solution allows expert employees to transition
knowledge to novice workers or a machine or solution vendor to train a new
customers’ IT or OT team.

PTC has a lineup
of customers leveraging its Vuforia technology as proof points. Customers seem
to adopt in two ways: by leveraging PTC’s polished tools Vuforia Expert Capture
and Vuforia Studio, such as Howden and Aggreko, or by building upon PTC’s
foundation, such as Fujitsu and Caterpillar, which are leveraging Vuforia
Engine to build a proprietary solution.

How well Vuforia
is performing monetarily is still questionable to TBR. TBR expects many Vuforia
customers are in the pilot and proof-of-concept stages, which could indicate
Vuforia is not yet being fully monetized while in multiple trials. However, in speaking
about PTC’s strategic partnership with Rockwell Automation, PTC CEO Jim Heppelmann
noted 40% of Rockwell Automation’s IoT wins have included AR with joint
customers particularly interested in Vuforia Expert Capture. According to Heppelmann,
Vuforia contributes 7% of PTC’s current software revenue, a respectable amount
compared to its larger legacy PLM and CAD businesses, with growth of 80%
year-to-year (TBR expects from a very small base). He also noted the AR-IoT
combo is a core growth business for the company and expects the combination
to contribute one-third of its sales moving forward, with continued growth of
nearly 40% year-to-year.

An interesting
thread we have not seen PTC talk about, publicly or privately, is offshoots of
Vuforia to the consumer market and leveraging Vuforia Expert Capture for consumer
self-help applications, e.g., instead of a YouTube video on how to tie a
complicated knot, a VR experience guiding people on how to tie a knot could be
more impactful. This could be expanded to cooking guides, exercise guides, or
sewing guides as examples within a huge pool of opportunity. Microsoft and the
HoloLens team could be a good partner for these applications, such as
leveraging the Xbox install base to reach consumers (if Microsoft is not
already moving in this direction alone), and could help foster a content
creator network. It could also be leveraged by consumer-focused businesses to
educate its end customers, such as sporting goods company Coleman delivering a
VR walkthrough of setting up a tent.

Strong investments by webscales and China-based telcos will carry the telecom infrastructure services (TIS) market through the COVID-19 crisis relatively intact, with a shallow decline of relatively short duration expected in the overall market followed by a robust, sustained recovery as CSPs in other key countries accelerate their infrastructure initiatives to align with the new […]

Strong investments by webscales and China-based telcos will carry the telecom infrastructure services (TIS) market through the COVID-19 crisis relatively intact, with a shallow decline of relatively short duration expected in the overall market followed by a robust, sustained recovery as CSPs in other key countries accelerate their infrastructure initiatives to align with the new […]